The Russian aggression in Ukraine, launched on February 24, will bring many effects that are hard to predict today. What can be said with 100% certainty is that Vladimir Putin's offensive could thwart European plans to become a chip market leader.
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We have already devoted a lot of space in our pages to the consequences of the war beyond our eastern border. However, the situation is dynamic, which means that it is difficult to forecast further events today with a high degree of certainty.
Raw materials worth their weight in gold
However, there are areas that have already suffered and there are indications that they will continue to suffer further losses. Those who carefully read the texts that have appeared in Automation Trader since the second half of last year know that the world has been struggling with quite serious shortages in the semiconductor market for a long time. This was initially driven by the pandemic that hit supply chains, but it also had a strong impact on rising commodity prices.
Of course, the more optimistic analysts and experts forecasted that in 2022, and at the latest in its second half, the situation should normalize. Of course, no one took into account the outbreak of a war on such a scale and the reaction of practically the whole world, which leads step by step to making Russia a global pariah.
The actions taken, although right, will have consequences. It is no secret that the most rare elements used in the production of chips and semiconductors come from Russia.
Addiction
The first raw material is Neon, which is necessary for the operation of lasers. It just so happens that the world is practically dependent on the Russia-Ukraine duo in this matter. In the former, it is produced, and in the latter, it is cleaned and prepared for export. Today, when both countries find themselves on the path of war, it has become impossible to continue supplying consumers.
The same is true of Palladium, 37 percent of whose global exports come from Russia. This rare metal, in turn, is crucial in the production of some semiconductors. The United States, which is in the forefront of those imposing painful sanctions on the Putin regime, could suffer the most from the shortage of these raw materials. - If the current situation persists or worsens, US chip makers could suffer severely from supply interruptions - said Lita Shon-Roy, Techcet president, quoted by Forbes. - The truth is that virtually all of the US needs for Neon are covered by Russia and Ukraine - she added.
Revision of plans
The ERACTIV report shows, in turn, that Europe may also have problems, the importance of which in the context of the semiconductor market has decreased from decade to decade. In 1990, the Old Continent was responsible for 44 percent of the world's production, but in 2000 this value dropped to 24 percent. Today, Europe is responsible for only 10 percent of global volume, and it is no wonder that Brussels has made this one of its priorities to change this state of affairs.
Due to the war in Ukraine, the plans of the European Union will have to be seriously revised. And although the effects of Russian aggression are not yet fully visible today, it may turn out to be very painful in the long run. "The perspective of six or twelve months seems much more reliable in this case," reads the report.
- At the moment, none of our suppliers has reported any potential threat related to the Russian aggression. The situation is of course monitored, and we are in constant contact with our suppliers and partners - said a spokesman for one of the European chip industry giants, STMicroelecronics.
Meanwhile, the war continues and it seems that a long time will pass before we fully know its consequences.
